Wasps and Worcester went into administration 13 days apart in October, with both clubs subsequently relegated and suspended from the Premiership amid searches for new owners; both clubs made ‘No Fault Insolvency’ applications, which if upheld would have overturned their relegation
Last Updated: 06/12/22 4:34pm
Worcester and Wasps had ‘No Fault Insolvency’ applications rejected
Wasps and Worcester have had their attempts to overturn their automatic relegation from the Premiership rejected by the Rugby Football Union, after the clubs were deemed to be at fault for their financial collapse.
The two clubs went into administration 13 days apart in October, with both subsequently relegated and suspended from English rugby’s top flight amid searches for new owners.
The administrators for both clubs submitted ‘No Fault Insolvency’ applications, citing the Covid-19 pandemic as their primary reason for entering administration, which if upheld would have enabled them to maintain their Premiership status.
However, the RFU’s Club Financial Viability Group found that Wasps submitted “insufficient evidence” to prove there had been no fault by the club, while Worcester’s “business model” was cited as a key reason for the rejection of their application.
Both clubs have a right of appeal to an independent panel, while the RFU reiterated a December 12 deadline for the sale of each team to be completed, in order to allow them to take up places in the Championship for the 2023-24 season.
Both clubs have had their relegation from the Rugby Premiership upheld
In a statement released after the decision was announced on Tuesday, RFU chief executive Bill Sweeney said: “We are all deeply concerned by the insolvency of Worcester Warriors and Wasps rugby clubs.
“We appreciate this decision will be disappointing for the clubs and their fans but it’s clear from the Club Financial Viability Group’s investigation that there were factors beyond Covid that resulted in the clubs entering insolvency.”
In November, Sweeney was heavily criticised by members of the select committee for the Department for Digital, Culture, Media and Sport (DCMS), who accused him of living in an “ivory tower” over the RFU’s role in the clubs entering administration.
Please use Chrome browser for a more accessible video player
Julian Knight MP has accused RFU chief executive Bill Sweeney as being asleep on the job, for failing to keep clubs like Worcester and Wasps alive
The DCMS committee pinpointed the RFU’s failure to alter its fit and proper persons test, even after the sport’s national governing body became aware that former Worcester part owner Colin Goldring had previously been sanctioned by the Solicitors Regulation Authority.
Sweeney added: “This has reinforced the need for greater financial transparency between clubs, Premiership Rugby and the RFU to enable both organisations to have better visibility of how these businesses are run.
“We are already working on plans with Premiership Rugby to explore how to improve the structure, governance and business model of rugby union in England and support the clubs in becoming more sustainable.”
In Wasps’ case, the RFU said there had been “insufficient evidence” provided to prove there had been no fault on the part of the club or its directors.
Sweeney has called for ‘greater financial transparency’
The RFU found that Wasps’ business plan had “lacked resilience” and left the club in a “precarious position”, where the impact of a “shock” such as the coronavirus pandemic was more likely to create an insolvency event.
A failure to provide details of correspondence between the club and HMRC regarding the possible filing of a winding-up petition was cited as another reason for the RFU’s decision.
In the case of Worcester, the RFU acknowledged the pandemic’s “substantial financial effect” on the club but cited a “business model which did appear to be perpetually funded by debt” as a key factor in its failure.
As with Wasps, the failure to provide any correspondence between the club and HMRC regarding its failure to meet Time to Pay arrangements was cited as a reason for the failure of Worcester’s application.
